Economics - Detroit

The Mises Institute is proposing a Libertarian solution to the Detroit bankruptcy.

Somehow I'm having a problem seeing this working out. Let's assume the full Monty here; Free Detroit. First the City government devolves into a crime syndicate competing with the pre existing groups to sell protection.

Businesses may thrive, but outsiders would squeal about unfair competition and begin to impose duties in one form or another.  Absent environmental regulation, Detroit 2014 would quickly enough devolve into Detroit 1950 complete with smoke-belching stacks. You wouldn't want to live down wind of it.

The Hong Kong model had regulations, just not too many of them. Perhaps in stead of unbridled Libertarianism, we should go for Hong Kong Libertarianism.

FWIW, a similar solution (HKL) has been proposed for Italy. Would it work? Certainly. All you'd need would be a large enough army to impose it and keep it. After 10 years, you could probably remove the army. After 30 years, it would be back to where it was in the first place. That or Genoa would be the capital of Northern Italy, economic power house, Rome would be the capital of Southern Italy, vacation spot and backwater, and Atlantic City would be the capital of Sicily famous for having no extradition agreements with anyone.